DESTEP analysis diagrams: what they are and how to use them

By: Leanne Armstrong

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As one of the many pre-made templates offered in MindManager, DESTEP analysis diagrams offer up a simple framework for breaking down the complexities of strategic planning. Not only do they encourage the sound analysis of key market factors, they’re a solid team discussion and decision-making tool.

Want to find out how these diagrams can support your business planning? Then let’s jump in with a brief DESTEP analysis definition.

What is DESTEP analysis?

The chief thing to know about DESTEP analysis is that it’s a popular technique for evaluating the outside influences most likely to impact your organization.

The term DESTEP is actually an acronym for 6 categories of external factors:

1. Demographic (includes population characteristics like age, gender, and geographic location)
2. Economic (includes regional factors like recession, currency value, and disposable income)
3. Social-cultural (includes customer values, risk tolerance, or buying behaviors)
4. Technological (includes recent or evolving trends in usage, security, and innovation)
5. Ecological (includes environmental considerations like waste management and climate)
6. Political/legal (includes local legislation, policies, and licensing regulations)

As we dig deeper into this DESTEP analysis definition, you’ll discover how using a simple visual map can help you better understand your company’s operational environment so you can adjust your plans and decisions accordingly.

 

How to use DESTEP analysis

For better or worse, every business is influenced by its environment in different ways at different times. And although external forces are beyond your control, you can use DESTEP analysis to respond to and strategize around them.

Creating a DESTEP analysis diagram will help you:

• Explore the 6 major environmental factors so you can prepare more effective business forecasts
• Identify external opportunities and threats, so you can improve your risk management
• Extend analysis results with a SWOT diagram (also available in MindManager), so you can boost your strategic planning efforts

Analyzing DESTEP forces in advance, for example, may help you determine whether opening that branch in a brand-new location is a good idea this year.

You might also use a DESTEP diagram to visually summarize current impacts on your business for new hires joining your team.

And because it incorporates key demographic information (unlike a PEST analysis, for example), you can wield DESTEP analysis as a powerful marketing tool.

No matter how you put it to work, you should understand that while a DESTEP analysis diagram is easy to create, it’s the legwork you and your team do in advance that ultimately determines how effective it is.

How to create a DESTEP analysis diagram

There are several ways to structure a DESTEP analysis diagram. You can lay down and flesh out the 6 environmental categories in separate, side-by-side columns, in a 2 x 3 table, or – if you take advantage of MindManager’s built-in DESTEP analysis template – as a one or two-sided tree diagram.

Here’s how to create a DESTEP analysis diagram in 4 easy steps.

1. Assemble a cross-functional team (the more diverse your contributors’ experience, backgrounds, and roles, the more insight and value you’ll gain from your assessment of external factors impacting your business).
2. Have your team investigate current DESTEP conditions before sitting down to create your diagram. To streamline this process, you may want to assign one category to each team member.
3. Place a circle or node in the center, or off to one side of your diagram and label it accordingly (you might use “DESTEP Analysis for Your Company Name”, for example). Connect line branches from your main node to each of the 6 DESTEP categories. These branches can be placed down one side, or split evenly on two sides of your diagram.
4. Based on your research, and getting more specific as you go, continue branching from each DESTEP category to the individual points and subpoints that are relevant to your business.

And that’s it!

Since external influences tend to change however, it can be worth performing a DESTEP analysis at least once a year – or any time your organization engages in agile planning.

Example of a DESTEP analysis

DESTEP analysis is especially useful for determining how viable a fresh business opportunity may be. Here’s a very simple example to show you what that determination process might look like.

Let’s say your fine dining restaurant, Hi-End, is booming and you’re considering opening a second location in the densely populated X City.

Knowing how important it is to weigh all the external factors that might influence your new site’s success, you enlist a team consisting of:

• Your chef, restaurant manager, and key members of your kitchen and wait staff
• Your marketing consultant, lawyer, and accountant
• Your current (and potentially interested) investors

Before sitting down as a group, you ask each team member to find out as much as they can about X City’s:

1. Population
2. Local economy
3. Restaurant clientele
4. Internet savvy
5. Restaurant waste practices and costs
6. Food establishment licensing regulations

Next, armed with visualization software that makes it easy to create and populate an interactive DESTEP analysis template from external research files, your team meets to flesh out this diagram.

DESTEP Analysis for Hi-End in X City

 

 

As you and your team study and discuss these results, you come to two major conclusions:

• The costs and task management attached to opening and running a Hi-End restaurant in X City appear manageable enough to make exploring this opportunity further worthwhile
• Developing a profitable fine dining customer base doesn’t look very promising in light of the local population’s age, habits, family structure, and finances

Ultimately you conclude that, despite the sound infrastructure and large number of people living in X City, it doesn’t represent the best expansion location for Hi-End 2.0. You decide to look elsewhere.

DESTEP analysis use cases

Because DESTEP analyses include a high level of detail around environmental factors that are relevant to most companies, they can benefit any business in any industry.

The key is to:

• Define the scope of your evaluation carefully, so its implications will be clearly visible and understood by everyone involved
• Thoroughly investigate the current state of each of the 6 DESTEP forces, so you can make more accurate predictions around them
• Use a visual diagramming tool that lets your team work together in real time to incorporate information from both internal and external sources

Here are a few fictional use cases that help demonstrate the versatility of a DESTEP analysis diagram.

Company A wants to introduce their popular, North American line of designer doggie clothing to a fashion-forward region of Europe.

Assembling a diverse team from their sales, marketing, and accounting departments, the company researches DESTEP conditions in the targeted country, creates an analysis diagram, and makes an impactful discovery. While fashion appreciation and disposable income are relatively high in the region they’re exploring, dog ownership is significantly lower than in most other European countries.

Conclusion: The company decides to look for a more feasible expansion market.

Company B wants to cut costs by outsourcing their customers’ IT support.

Knowing that 24-7 overseas call centers offer knowledgeable and cost-effective support, the company creates a DESTEP analysis diagram to explore external forces in a particular call center region. Despite a number of promising elements, technological factors like slow local internet bandwidth speeds are a concern in terms of achieving the consistent IT support their customers need.

Conclusion: The company decides to consider alternative outsourcing options.

Company C wants to run group travel tours in a new, exotic location.

As seasoned travel experts, the company understands the importance of running a detailed DESTEP analysis on their proposed tour destination. They complete their research, plug the results into a tree diagram, and are delighted by positive indications for both a predictable weather climate and a stable political environment.

Conclusion: The company decides to take the next step and use their DESTEP data to create a SWOT analysis of their proposed business plan.

Remember, it’s your ability to evaluate and understand how external market factors might impact your business that can prove crucial to the success of any new endeavor. Make sure you take advantage of both a diverse team and toolbox when conducting your DESTEP analysis.

Downloadable DESTEP analysis templates from MindManager

Click the images below to access the DESTEP shared above, and a blank template created using MindManager. Click “Menu” in the bottom left corner of your browser window, and then click “Download” to get a copy of the template. Open the template in MindManager to start working.

Don’t have MindManager? No worries! Try it free for 30 days.

 

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